Global ETF News Older than One Year
IMF-Plain Vanilla Investment Funds Can Pose Risks
April 8, 2015--Asset management industry plays rising role in financial system
Role has benefits, risks for financial stability
More "hands on" supervision needed, with better data, oversight
Even simple investment funds such as mutual funds can pose financial stability risks, and regulators need to know more about them through hands-on supervision, and better data and oversight, according to new research from the International Monetary Fund.
Asset management firms help investors diversify their assets easily. The industry can also be a “spare tire” for financing the real economy when banks are distressed. Compared to banks, investment funds offered by asset managers are less likely to default because end investors bear losses and gains from the funds' assets.
Source: IMF
Global Financial Stability Report (GFSR)
April 8, 2015--Contents
Chapter 2: International Banking After the Crisis: Increasingly Local and Safer?
Chapter 2 analyzes developments in international banking since the global financial crisis. It highlights a shift from direct cross-border lending to local lending by foreign banks' affiliates. The decline in cross-border lending can be explained by a combination of regulatory changes, weaknesses in bank balance sheets, and macroeconomic factors.
view Chapter 2: International Banking After the Crisis: Increasingly Local and Safer? Chapter 3: The Asset Management Industry and Financial Stability
Chapter 3 examines potential risks stemming from the asset management industry, focusing on "plain-vanilla" products, such as mutual funds. Even these vehicles may pose financial stability risks due to incentive problems between portfolio managers and end investors (which may lead to herding) and due to run risk stemming from liquidity mismatches. The empirical analysis finds evidence for many of these risk-creating mechanisms, although their importance varies across markets. Oversight of the industry should be strengthened, with a better microprudential supervision of risks and by adopting a more-encompassing (macroprudential) approach. view Chapter 3: The Asset Management Industry and Financial Stability
Source: IMF
ETFGI monthly newsletter-March 2015
Source: ETFGI
Africa: Brics Insights Papers-Brics and Development Finance Institutions
This is in response to the growing need for the financing of capital-intensive projects, such as infrastructure and information and communication technology development.
Much of this financing is from national development banks: Brazil's National Bank for Economic and Social Development (BNDES), the China Development Bank (CDB), the Eximbank of China, The Development Bank of Southern Africa (DBSA) and others are providing increasingly large amounts of finance for development projects both within their own countries and beyond their borders.
BRICS Insights 1: India's Experience with Multilateral Financial Institutions (341.2 kB) BRICS Insights 2: New South-South Co-operation and the BRICS New Development Bank (335.73 kB) BRICS Insights 6: BRICS In Their Regions: Exploring The Roles Of Regional Finance (494.52 kB)
Source:allAfrica.com
ETF Securities Weekly Outlook-Why so serious? Facing deteriorating earnings.
The strong US dollar has pressured earnings. Since the end of 2012, the US dollar index and the estimated S&P 500 PE ratio for the coming year have increased 23% and 25% respectively.
In Q1, overall Exchange Traded Funds (ETFs) inflows were positive (+$58Billion) but the largest outflows were in ETFs tracking the S&P 500 (-$33B).
Source: ETF Securities Research
In new research, EDHEC-Risk Institute proposes a different reporting approach to better assess the real risks and performance of a portfolio
This research was conducted with the support of CACEIS as part of EDHEC-Risk Institute's research chair on "New Frontiers in Risk Assessment and Performance Reporting". This study finds that, for a number of stocks, their official nationality does not match their real economic exposure as represented by the company's distribution of sales. A dominant practice in the search for international diversification of equity portfolios is to classify stocks according to their place of listing, incorporation or headquarters. However, such a practice is questionable within the context of a globalised marketplace where a company's operations are typically not restricted to any single country.
Source: EDHEC-Risk Institute
IOSCO consults on business continuity plans for trading venues and intermediaries
The consultation report Mechanisms for Trading Venues to Effectively Manage Electronic Trading Risks and Plans for Business Continuity provides a comprehensive overview of the steps trading venues take to manage the risks associated with electronic trading and the ways they plan for and manage disruptions through business continuity plans. As technology continues to evolve, trading venues will need to continuously adapt to these changes. >a href="http://www.iosco.org/news/pdf/IOSCONEWS376.pdf" TARGET="_top">view more
April 8, 2015--The ETFGI monthly newsletter, March 2015 is now available.
April 8, 2015--A new set of paper have just been released looking at BRICS and Development Finance Institutions.
Background to the papers
The 21st century has seen the rapid expansion and internationalisation of development finance from emerging market economies.
April 8, 2015--Earnings growth has lagged market price performance since 2012. Stock price appreciation may have extended too far to justify potential earnings growth.
April 7, 2015--In a new publication entitled "Accounting for Geographic Exposure in Performance and Risk Reporting for Equity Portfolios", EDHEC-Risk Institute underlines the usefulness of analysing the performance and risks of portfolios, by taking into account their geographic equity exposure based on real economic activity and not only on their place of listing or, more generally, the nationality assigned to them in market indices.
April 7, 2015--The International Organization of Securities Commissions (IOSCO) today published two consultation reports aimed at further enhancing the ability of financial markets and intermediaries to manage risks, withstand catastrophic events, and swiftly resume their services in the event of disruption.
view the Consultation Report-Mechanisms for Trading Venues to Effectively Manage Electronic Trading Risks and Plans for Business Continuity view the consultation report-Market Intermediary Business Continuity and Recovery Planning
Source: IOSCO
Lyxor Monthly European ETF Market Trends-March 2015 in brief
Total Assets under Management are up 20% vs. the end of 2014, reaching EUR 436 billion, and include a significant market impact (+13.7%*). ETFs on European and Asian equities and on fixed income have been the main beneficiaries of a bullish environment.
Equity indexation inflows were limited to EUR 2.4 billion, -26% vs. the one-year average. Investors are favouring European and Asian equity ETFs, supported by monetary
policy that is still accommodative. European equity ETF inflows have reached EUR 4.9 billion only 14% below January 2015's record high of EUR 5.7 billion. Asian equity ETFs inflows have
reached a one year record high at EUR 931 million.
Source: Lyxor
Deutsche Bank-Synthetic Equity & Index Strategy-Global-The Flow Whisperer-TAARSS says prefer a mix of Bonds and Equities in Q2
While US bonds (AGG) ended slightly positive at 0.4% as rising rates concerns eased. TAARSS rotation strategy monthly performance review
Most quarterly and monthly TAARSS strategies outperformed their respective benchmarks during Q1 and March, respectively.
Tactical positioning for Q2 and April 2015 based on TAARSS
For Q2 we recommend an almost equal mix of Bonds and Equity, while limiting Commodity to a minimum allocation. Basically markets are divided, some investors are confident on growth others are not as sanguine, therefore it should pay off to be diversified. In terms of fixed income term allocations, prefer the belly of the curve during Q2, effectively lowering duration respective to Q1.
This month in global equity markets prefer Intl DM over EM, and stay neutral to the US. Region wise prefer Europe and Asia Pacific, while staying neutral to North America, and away from Latin America. In US equities prefer Small and Mid caps, while keeping Large Caps at a minimum. Sector wise Domestic Cyclicals show the best support, especially Consumer Discretionary. Defensives are mixed with Telecom and Health Care showing support, while Utilities and Cons. Staples suggesting selling pressure. Industry wise we highlight Aerospace & Defense which continues to experience very strong support. In Intl DM countries prefer Germany and Japan. Within EM countries India continues to show strong investment demand support despite the performance setback last month; similarly Taiwan has also experienced some good support. The rest of the countries seem weak. For Fixed Income prefer credit over rates, but stay within investment grade.
Source: Deutsche Bank-Synthetic Equity & Index Strategy-Global
Nasdaq Q-50's Strong Q1 and other Monthly Performance Highlights
However, that currency swing has richly rewarded investors in the local European equity markets with strong outperformance over the US market.
The Nasdaq Composite had a historic month in March as it crossed the 5000 threshold for the second time ever and first time since March 2000. The difference between 5,000 in March 2000 versus 5,000 in March 2015 has been widely dissected by the financial press, but it's worth pointing out again the massive shift the Nasdaq-listed stocks have undertaken in their fundamental strength while also driving significant innovation to the world through technology, healthcare and consumer goods.
Source: Nasdaq
April 6, 2015--European ETF market flows remained sustained in March 2015. NET NEW ASSETS (NNA) during this month amounted to EUR 6.4 billion, nearly 20% above one-year average flows.
April 6, 2015--Tactical Asset Allocation Relative Strength Signal (TAARSS) Monthly Update
Top recommendations for April: European, German, Japanese, and Indian equities, and US Intermediate IG Credit.
Market review
Risky assets were challenged again in March with Global equities (ACWI) and Commodities (DBC) retreating by 1.5% and 6.0%, respectively.
April 6, 2015--The OMX Nordic Index Family, the benchmarks of the Nordic markets, have experienced a strong start to 2015 on the back of a collapsing Krona. The SEK has weakened by over 10% year to date as the European continent, not just the Euro, have been on the wrong side of the US Dollar.
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